Car sales expected to grow by 3.15% in 2015

Car sales will continue to rise despite the country’s gloomy financial outlook. National car models are expected to be on top of the list. – The Malaysian Insider file pic, January 1, 2015.Malaysians will continue to buy cars despite the gloomy financial outlook, with vehicle sales expected to grow by 3.15% or 685,950 year-on-year in 2015, led by national car models, consulting firm Frost & Sullivan said today."The projected increase this year is due to new model launches with competitive pricing and a stable economy," said senior partner Kavan Mukhtyar.During a presentation at the firm's office in Plaza Mont Kiara today, Kavan cited the high back orders from 2014 for two new national models."The high back-orders last year for the Perodua Axia and Proton Iriz are likely to support vehicle sales growth this year," Kavan said.But, the rise in the overall growth of vehicle ownership is likely to be tempered by financial institutions tightening credit. In comparison with last year, the firm had projected vehicle sales to grow 4.2% for 2014."Middle and lower income groups are likely to face moderate difficulty in getting hire purchase loans from financial institutions," he said."Financial institutions are expected to take necessary action to tighten credit," he told reporters during the presentation.Also, the depreciation of the ringgit against foreign currencies could also lead to slight increases for the cost of imported spare parts.The subsidy rationalisation exercise by Putrajaya, which has led to the removal of the fuel subsidy, would see the market making a steady recovery."Consumers will understanding the changes and start adapting," Kavan said, adding the same would apply once the goods and services tax (GST) was implemented.The GST will be implemented on April 1, replacing the current sales and services tax, as Putrajaya looks to increase revenue.Kavan said vehicle sales for 2014 were expected to end at 665,000 units, an increase of 1.4% year-on-year growth."This was mainly driven by positive consumer sentiment and the launch of several new models such as Honda City and Jazz, Perodua Axia and Proton Iriz."He also said that the cost of vehicle insurance was not expected to increase once the GST had been implemented; but, would most likely decrease."The GST covers a wide range of products and services, hence it would have a minimal effect on the overall cost of a vehicle, but not the insurance."Also, Kavan said car manufacturers were looking to take advantage of Putrajaya's benefits and incentives for the energy efficient vehicle (EEV) sector.Honda has emerged as the largest non-national player with a market share of 13%, aided by the launch of a 4th generation City and 3rd generation Jazz."Other car manufacturers will also look to follow in Honda's footsteps and place emphasis on local production," Kavan said.In the long term, Kavan said depending on market growth, vehicle sales in Malaysia, year-on-year, could breach the 1 million mark. – January 7, 2015.